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  • 27 Nov 2014

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State timber economy ready to rebuild

Oregon’s timber industry should see some growth as national housing starts pick up, but don’t expect it to come quickly.

That’s the consensus of a three-person panel at the Portland Business Alliance’s monthly breakfast forum Wednesday morning.

“The consensus is that the demand globally for wood fiber is going to continue to increase, but it’s going to be slow, it’s going to be sporadic,” said Doug Robertson, longtime Douglas County commissioner.

“I think it’s going to be choppy,” agreed Andrew Miller, president and chief executive officer of Portland’s Stimson Lumber.

Joshua Prangley concurred. “I think it’ll be a little bit lumpy.”

He’s the vice president of basic materials investment banking for J.P. Morgan Chase in Chicago.

Despite signs of life in Oregon’s timber sector, it isn’t so easy for the industry to rev up after the protracted decline caused by the Great Recession.

Miller, whose company manages 500,000 acres of private timber land, said Stimson has had trouble getting logging contractors for the past three years, because so many left the field when demand disappeared.

“The whole supply chain shrunk,” Miller said. “It will take years in some cases to rebuild capacities.”

That extends even to the homebuilding industry, Prangley said. The nation lost 2 million construction jobs, he said, and many of those idled workers left for other industries.

It’s hard to reopen a wood products mill once it closes down, said Robertson, whose county, the heart of Oregon timber country, has seen the closure of about two-thirds of its mills in the past four decades.

All three panelists are skeptical there will be any significant increase in logging in national forests, given the propensity of environmental groups to challenge timber sales in court. However, they see a window of opportunity in a proposed bill that aims to shift control of 1.4 million acres managed by the U.S. Bureau of Land Management to the state of Oregon. Those are the so-called “O&C lands,” originally granted to the Oregon and California Railroad by an 1866 federal act as compensation for building a rail line from Ashland to Portland.

Oregon Congressmen Greg Walden, R-Hood River, Peter DeFazio D-Springfield and Kurt Schrader, D-Canby, are working on the bill. Gov. John Kitzhaber recently appointed a task force, including representatives of several Oregon environmental groups, to hammer out an agreement on the package.

The idea is that the state can better manage the timber lands in a sustainable fashion than the federal bureaucracy. In recent years, the timber harvest on state lands in Oregon has been in the same neighborhood as total cuts on federal lands, though federal lands are many times larger and account for half the land base in Oregon.

“I think we’re going to make some headway” with the O&C proposal, Robertson said.

Despite signs of revival in Oregon’s wood products industry, panelists cited trends that may shift control to non-Oregon companies.

“I get calls every week from investors wanting to buy timber land,” Miller said, citing an increasing appetite among outside investment funds.

He also foresees potential new ownership of the remaining privately held timber companies in Oregon when current families decide to leave the field. When there isn’t a younger generation in the family willing or able to take over the companies, Miller said, financial institutions in Boston and Chicago might step in and acquire local companies.